House property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2012 Acc. to sec 27 if any individual has transferred the house prop. to his spouse without adequade consideration, then he shall be considered to be Deemed Owner of that house property.......this sec. is clashing with the provisions of Gift under which any1 can transfer immovable prop. to his relatives (this is mentioned under gift in kind category). PLZ REPLY

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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01 May 2012 You can elaborate your query after reading Section 56(2)(vii)(b) which has been prescribed specifically for immovable property and as such no other sub-clause relevant to other assets would apply.
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In this sub-clause, immovable transferred without consideration, is covered. There is a difference in without consideration and without ADEQUATE consideration.
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Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2012 But,sir, i have red the example under this sec 27(i), in which it is mentioned that when the H.P. has been gifted then also the transferor shall be the deemed owner.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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01 May 2012 You are right.
Section 27 deals with the issue of ownership which may be applied where income is arising from such House Property has to be computed.
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Whereas Section 56 deals with the income on account of the gifted immovable property.
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Now, please clarify the clashing areas, as still I could not catch those.
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Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2012 So u mean to say that if there is inc. from such H.P.(rent) , then such income shall be clubbed in the income of transferor, and only then he
will be the deemed owner of such HP. And if there is no income(rent) from such HP, then he will not be the deemed owner his wife will be the owner.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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24 May 2012 The concept of deemed owner is applicable only for the purpose of taxation.

Impact will be as under:

1. If there is only 1 house property and it is self occupied there is no tax implication. The husband shall be eligible to claim deduction of interest on loan and principal repayment, if any.

2. If the house is let out, rental income shall be taxable in the hands of the husband (clubbing does not apply. He is owner, that is why rental income is taxable in his hands).

3. The capital gain arising on the transfer of this house shall be taxable in the hands of the husband and not the wife.

4. If the husband owns one more house, then one of the two houses shall be self occupied and the other shall be deemed to be let out, income from which will be taxable in the hands of the husband.

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